Oil prices rise after Venezuela moots output cut

SINGAPORE - World oil prices rose in Asian trade Wednesday on fresh supply concerns after key producer Venezuela indicated it could ask OPEC to cut output, dealers said.

By (AFP)

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Published: Wed 20 Aug 2008, 2:05 PM

Last updated: Sun 5 Apr 2015, 11:55 AM

In afternoon trade, New York's main contract, light sweet crude for September delivery, rose 40 cents to 114.93 dollars a barrel. The contract had jumped 1.66 dollars to close at 114.53 dollars in New York on Tuesday.

Brent North Sea crude for October delivery added 47 cents to 113.72 dollars a barrel after rallying 1.31 dollars to settle at 113.25 Tuesday in London.

Venezuela's Energy and Petroleum Minister, Rafael Ramirez, said Tuesday his country will propose production cuts at the next Organisation of the Petroleum Exporting Countries (OPEC) meeting if oil prices continue to fall.

The cartel is to meet next month in Vienna.

‘If there is a trend or dynamic toward lower oil prices, Venezuela will consider the possibility of a cut in production,’ Ramirez said in remarks released by the ministry.

‘This is the position that we will take at the next OPEC meeting,’ he said.

Wednesday's price gains were ‘follow-through from last night's bounce,’ said Jonathan Kornafel, a director for Asia with energy derivatives trading house Hudson Capital Energy.

‘I don't think any decision is going to be made but I won't be surprised at the rhetoric and traders are looking at it,’ he said.

Despite the latest price gains, world oil prices are down from record highs above 147 dollars in July as weak US economic data raise fears for oil demand and dim investor appetite for commodities.

Data released on Tuesday added to signs that demand is slowing in the world's biggest energy consumer, the United States, dealers said.

The US Labor Department said wholesale inflation soared to 9.8 percent in July, the fastest rate in 27 years, while the US Commerce Department reported new home construction fell 11 percent to the lowest level in 17 years.

‘Standing back from all of this to glance at the big picture would certainly seem to endorse the oil market's sharp month-long decline,’ said John Kilduff, an analyst at MF Global.

The US Department of Energy was to release its latest weekly snapshot of energy stockpiles in the country later Wednesday.

Oil prices, which broke through the 100-dollar level at the start of 2008, remain well above year-ago levels.

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